A request for proposal, or RFP, is used by organizations to select a vendor. The purpose of the RFP is to provide guidelines to vendors for how to best fulfill the needs of the organization detailed in the request. The more efficient the document is in providing vendors with the three most important components in the RFP process, the more effective your final selection will be in meeting the needs of the organization.

Planning

Planning what to put into an RFP can save a great deal of time in the process of interviewing and selecting the right vendor for organization. While there are many different components of an RFP, there are three that rise to the top in terms of importance and overall time benefit -- defining your need, determining your communication strategy and coming up with evaluation criteria. These components will help to save time and make the process more effective in the delivery of an ideal vendor.

Defining Your Need

The most important component of an RFP is defining your need and communicating that need to vendors. This step may take some time, but it will also save time when reviewing submitted proposals. This will help vendors to tailor the proposal to the specific needs of the request. It will also help you to quickly weed out those that don't have the requisite capability. Be sure to give the vendor information about your organization, marketing efforts and culture.

Communication Strategy

Another important component of the RFP is determining the best distribution and communication strategy. The way you communicate with and receive proposals from vendors should be communicated within the RFP. Let the vendor know if an in-person presentation is required. You should also think about who you will be sending the proposal to. Also include a timeline with key dates such as RFP release, finalists notified, interviews, presentations and vendors selected.

Evaluation Criteria

The third critical component of an RFP is determining the criteria used to evaluate the proposal. This information should be shared with vendors. You may want to ask the main people that will be affected by the vendor in your organization if they have any specific criteria. This is also a good place to ask questions about attributes that will result in an automatic decline of the proposal. For example, if you require decentralized billing and the vendor only has centralized billing, it may be a challenge for the administrators within your organization.

About the Author

Sharon Barstow started her career in investment banking and then crossed over to the world of corporate finance as a financial analyst. She specializes in banking and corporate finance topics to include treasury management, financial analysis, financial statement analysis, corporate finance and FP&A. In addition to writing, she is the co-owner of a small dog bakery in rural Ohio.